OBSERVER: The proposal to establish a Personal Injuries Assessment Board (PIAB) will not resolve the problems of personal injury compensation. Greater focus on safety at work and on our roads combined with effective law reform is the real antidote.
The public debate has to date failed to fully recognise the purpose of a fair system of compensation. That is to place victims of such negligence, insofar as money can do, in the same position as if they had not been injured. To look at the issue of compensation solely through the prism of cost and insurance premia ignores the most important interest of all - the rights of victims.
Two illustrations of common occurrences in our compensation system help to identify problems that are not addressed by a PIAB or the insurance industry.
Case A involves a young man who sustains serious brain damage in a road traffic accident. His case settles for a substantial sum. Because of an escalation in medical care and other costs there is now only a small sum of money left to cater for his needs for the rest of his life.
Yet the insurance company of the wrongdoer who caused the injury has no further responsibility. It is not obliged to contribute a further penny to alleviate the plight of this victim.
Case B is even worse. The injured employee sustained very serious bodily injuries and is a quadriplegic. Unlike Case A he received no compensation. His employer was not insured. This is the reality and injustice of our compensation system and it is ignored by the powerful interest groups who lobby for change. PIAB will not solve these problems.
The introduction of structured settlements (i.e. periodic payments over the lifetime of a victim) and mandatory employer's liability insurance would ensure that the impoverishment inflicted in both Case A and Case B would not be repeated.
And we can afford these changes. In terms of overall costs, it is worth noting that in Ireland we spend 0.67 per cent of GDP on compensating victims, whereas the OECD average is 0.7 per cent. Serious law reform and not the introduction of a new layer of bureaucracy is urgently required.
The decision to establish a PIAB is clearly premature. It will be ineffective in reducing costs. Tom O'Malley (a member of the working group that recommended the establishment of PIAB) has stated that "no decision should be taken on the establishment of a PIAB without an in-depth examination of the present system and its perceived deficiencies".
SIPTU recently passed a motion that PIAB should not be established without further consultation. The Bar Council agrees with this sentiment.
Other changes commend themselves. Regarding fraudulent claims, any person making those claims in court should be charged with perjury. Moreover a new offence of knowingly making a false or exaggerated claim should be created. The penalty to be imposed for such bogus claims must include mandatory financial sanctions.
The promise of lower premia is, I believe, illusory. We have all been given the impression that under 25-year-old drivers are more costly for insurance companies because of bad claims experience. This is not so. The Motor Insurance Advisory Board has stated that the insurance industry's classification of all drivers under 25 as non-profitable is questionable. From 1993 to 1997 every age of policy-holder contributed more in premia than claims, other than 17- and 18-year-old drivers. One is entitled to question figures from the insurance industry.
We need a thorough and comprehensive examination of the insurance industry in addition to effective law reform. Indeed, an investigation of the insurance industry by the Competition Authority or an Oireachtas Committee merits consideration.
A new bureaucracy is being introduced in the form of a PIAB. An initial independent assessment of the cost of that bureaucracy is of interest. It will cost at least €26.7 million per annum and it will need a staff of more than 300 to function, and suitable premises. Who is to pay for this? Ultimately it will be the taxpayer, who also pays high insurance premia. It is time for real change.
• Rory Brady SC is chairman of the Bar Council
